Legislation - Regulatory Instructions

Federal Revenue Service Regulatory Instruction (IN RFB) no. 1312 of December 28, 2012

Federal Official Gazette (DOU) publ. Dec. 31, 2012

Provides for the prices to be adopted in purchase and sale operations involving goods, services or rights carried out by individuals or legal entities resident or domiciled in Brazil with individuals or legal entities resident or domiciled abroad, deemed related parties.

( Amended by Federal Revenue Service Regulatory Instruction no. 1322 of January 16, 2013. )
( Rectified in DOU publ. Jan. 8, 2013, Section 1, p.11.. )
( Amended by RFB Regulatory Instruction 1395, of September 13, 2013.. )
( Amended by RFB Regulatory Instruction 1431, of December 24, 2013.. )
( Amended by RFB Regulatory Instruction 1458, of March 18, 2014. )



BRAZIL'S FEDERAL REVENUE SERVICE SECRETARY, in exercise of the powers conferred upon him by article 280, item III of the Internal Regulations of the Brazilian Federal Revenue Service (RFB), approved by the Finance Ministry (MF) Administrative Ruling no. 203 of 14 May 2012, and in view of the provisions set forth in articles 3 and 4 of Law no. 10451 of May 10, 2002, article 45 of Law no. 10637, of December 30, 2002, article 45 of Law no. 10833 of December 29, 2003, in articles 48-52 of Law no. 12715 of September 17, 2012 and MF Administrative Ruling no. 222 of September 24, 2008,
Resolves as follows:
Chapter I
Preliminary Provisions
Article 1 For purposes of the Income Tax and Social Contribution on Net Profit (CSLL) legislation, the deductibility of costs of imported goods, services and rights and recognition of revenues and income deriving from export transactions carried out by an individual or legal entity resident or domiciled in Brazil with an individual or legal entity resident or domiciled outside of Brazil deemed to be related parties, shall be determined in accordance with the provisions of this Regulatory Instruction.
Paragraph 1 In this Regulatory Instruction, the word "resident" shall apply to an individual or legal entity resident or domiciled in Brazil, and the term "nonresident" shall apply to an individual or legal entity resident or domiciled abroad.
Paragraph 2 The provisions governing the tax treatment given to transactions carried out by a legal entity domiciled in Brazil with an individual or legal entity resident or domiciled abroad, are applicable, to the extent deemed possible, to transactions carried out by individuals resident in Brazil with an individual or legal entity resident or domiciled outside of Brazil.
Section I
Related Parties
Article 2 For purposes of this Regulatory Instruction, the following are construed as parties related to the legal entity domiciled in Brazil:
I - its head office, when domiciled abroad;
II - its branch or department (sucursal), domiciled abroad;
III - an individual or legal entity resident or domiciled abroad which has a capital participation and is deemed to be a controlling or affiliated party as provided for by paragraphs 1 and 2 of article 243 of Law no. 6404 enacted on December 15, 1976;
IV - a legal entity domiciled abroad which is deemed to be its controlled or affiliated entity as provided for by paragraphs 1 and 2 of article 243 of Law no. 6404/76;
V - a legal entity domiciled abroad, when such legal entity and the legal entity domiciled in Brazil are under common corporate or administrative control, or when at least ten percent (10%) of the capital of each of them belong to the same individual or legal entity;
VI - the individual or legal entity resident or domiciled abroad, which, jointly with the legal entity domiciled in Brazil, hold equity interest in the capital of a third company, whose sum characterizes them as parent companies or affiliates thereof, as defined in paragraphs 1 and 2 of article 243 of Law no. 6404 of 1976;
VII - the individual or legal entity resident or domiciled abroad which is its associate, in the form of consortium or joint venture, as defined in Brazilian law, in any undertaking;
VIII - the individual resident abroad who is a relative or the like up to the third degree, spouse or common-law spouse any of its officers or of its controlling shareholder or member, in a direct or indirect participation;
IX - the individual or legal entity resident or domiciled abroad who benefits from exclusivity as its agent, distributor or dealer for the purchase and sale of goods, services or rights;
X - the individual or legal entity resident or domiciled abroad, in relation to whom the legal entity domiciled in Brazil benefits from exclusivity, as agent, distributor or dealer for the purchase and sale of goods, services or rights.
Paragraph 1 For the purposes of item V, the legal entity domiciled in Brazil and that domiciled abroad are deemed to be under:
I - common corporate control, when the same individual or legal entity, regardless of the location of their residence or domicile, holds shareholder or member rights in each of these legal entities, which ensure it, permanently, preponderance in corporate decisions affecting them and the power to elect a majority of its directors;
II - common administrative control, when:
a) the position of chairperson of the board of directors or chief executive officer of both of them is held by the same person;
b) the position of chairperson of the board of directors of one entity and of chief executive officer of the other one are held by the same person;
c) the same person holds a management position, having decision-making power in both companies.
Paragraph 2 In the case of item VII, companies shall be deemed related parties for the duration of the consortium or joint venture in which the association takes place.
Paragraph 3 For purposes of item VIII, common-law spouse of an officer, controlling shareholder or member of a legal entity domiciled in Brazil shall mean a person living with him/her as a spouse, as provided for in Law no. 9278 of May 10, 1996.
Paragraph 4 For purposes of items IX and X:
I - the related party condition only applies in relation to transactions involving goods, services or rights to which exclusivity is ascertained;
II - deemed as exclusive distributor or dealer is the individual or legal entity holding that right in relation to a part or the whole territory of the country, including Brazil;
III - exclusivity shall be ascertained by means of a written contract or, in the absence thereof, by performance of trade transactions related to a type of goods, services or rights, carried out exclusively between the two legal entities, or exclusively by having one of them acting as intermediary.
Paragraph 5 The transfer pricing rules also apply to transactions performed by a legal entity domiciled in Brazil, by means of an unrelated appointed person that operates with another one abroad, characterized as related to the Brazilian legal entity.
Paragraph 6 The existence of a related party condition pursuant to this article, with an individual or legal entity resident or domiciled abroad in respect to purchase and sale transactions conducted during the tax year shall be reported to the Brazilian Federal Revenue Service (RFB) through the Corporate Income Tax Return (DIPJ).
Chapter II
Goods, Services and Rights Purchased Abroad
Article 3 Costs, expenses and charges related to goods, services and rights disclosed in the import or purchase documents supporting related-party transactions shall be deductible upon determining the Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL) tax bases only up to the amount that does not exceed the price determined by one of the methods prescribed in articles 8 to 16.
Section I
Common Rules for Import Costs
Article 4 For purposes of determining the price to be used as a parameter in related-party imports involving goods, services or rights, the importing legal entity may, subject to the provisions of article 40, opt for any of the methods addressed in articles 8 to 16, except in the case of import of commodities, pursuant to paragraph 1 of article 16.
Paragraph 1 In case of using more than one method, the highest amount determined shall be deemed deductible, and the method adopted by the legal entity shall be consistently applied by goods, service or right throughout the computation period.
Paragraph 2 The deductibility of depreciation, depletion or amortization charges of goods and rights is limited in each computation period, to the amount calculated based on the price determined by one of the methods referred to in articles 8 to 16.
Article 5 Once determined by one of the import methods, the prices to be used as parameter in cases of import from related companies shall be compared with those stated in the purchase documents.
Paragraph 1 If the price used in the acquisition by the related legal entity domiciled in Brazil is higher than that used as a parameter, resulting from the difference between compared prices, the resulting amount of the excess costs, expenses or charges, deemed deductible in determining the IRPJ and CSLL tax bases shall be adjusted as per accounting books, being recorded as debit to retained earnings/accumulated losses under equity, and as credit to:
I - the asset account where the acquisition of the goods, services or rights was accounted for, and which remained recorded there at the end of the computation period; or
II -specific cost or expense account related to the computation period, which records the value of the goods, rights or services, if they have already been written off of the asset account in which their acquisition was recorded.
Paragraph 2 In case of goods classified as noncurrent assets and that have generated depreciation, amortization, or depletion charges on a straight-line basis in the tax year of the import operation, the excess amount of the purchase price on the import shall be accounted for as provided in paragraph 1, item II.
Paragraph 3 In case of amounts not yet written off, the excess purchase price on related-party imports shall be credited directly to the asset account, matched against the retained earnings/accumulated losses account referred to in paragraph 1.
Paragraph 4 If the legal entity elects to add to its IRPJ and CSLL tax bases the excess amount determined in each computation period only upon realization by sale or write-off of the acquired goods, rights or services at any title, the total excess amount determined in the acquisition period shall be excluded from equity for purposes of determining the basis for calculation of the interest on equity referred to in article 9 of Law no. 9249 of December 26, 1995.
Paragraph 5 In the case mentioned in paragraph 4, the legal entity shall record the total amount of the excess purchase price in a specific subaccount in which the amount related to the goods, services or rights acquired abroad is recorded.
Paragraph 6 If the purchase price adopted by the legal entity domiciled in Brazil is lower than that used as a parameter, no adjustment implying tax effect can be made.
Article 6 For purposes of determining the parameter price based on the methods addressed in articles 8 and 12, prior to comparison, the prices determined shall be multiplied by the quantities related to the respective operation, and the results will be added and divided by the total amount, thus determining the weighted average amount corresponding to the price to be compared with that recorded in costs, computed in an income statement account by the legal entity.
Sole paragraph. For comparison purposes, the weighted average price of goods, services and rights acquired by a related legal entity domiciled in Brazil shall be determined by considering the quantities and amounts corresponding to all purchase transactions performed during the computation period under concern.
Article 7 The amount expressed in foreign currency upon imports of goods, services and rights shall be converted into Brazilian reais at the selling exchange rate for the currency, corresponding to the second business day immediately preceding the occurrence of the following events:
I - the record of the import declaration of the goods subject to clearance for consumption, in the case of goods; and
II - the recognition of the cost or expense related to the rendering of the service or the acquisition of the right, subject to the accrual basis of accounting.
Section II
Methods applicable to Imports
Subsection I
Comparable Uncontrolled Price Method (PIC)
Article 8 The cost of goods, services and rights purchased abroad, that is deductible upon the determination of IRPJ and CSLL tax bases may be determined under the Comparable Uncontrolled Price Method (PIC), defined as the weighted arithmetic mean of prices of identical or similar goods, services or rights, charged in the Brazilian or other countries' markets in purchase and sale transactions carried out by the concerned party itself or by third parties, under similar payment conditions.
Sole paragraph. Under the method addressed in the main section hereof, the prices of goods, services or rights purchased abroad from a related legal entity shall be compared with the prices of identical or similar goods, services or rights:
I - sold by the same exporting legal entity to resident or nonresident unrelated companies;
II -purchased by the same importer from resident or nonresident unrelated companies;
III -in purchase and sale transactions carried out between resident or nonresident unrelated third parties.
Article 9 The amounts relating to goods, services or rights shall be adjusted to minimize the effects of differences in business conditions, physical nature and contents on the prices to be compared.
Paragraph 1 In case of identical goods, services and rights, the only adjustments permitted are those related to:
I - payment terms;
II - negotiated volumes;
III - liability for product fitness warranty or for the applicability of the service or right;
IV -liability for promotion of the goods, services or rights to the public by means of advertising and publicity;
V -liability for costs of quality control, service and sanitary standards;
VI -agency costs for purchase and sale transactions carried out by unrelated companies, considered for price comparison purposes;
VII - packaging; (as reworded by Federal Revenue Service (RFB) Regulatory Instruction 1458, of March 18, 2014)
VIII - freight and insurance; (as reworded by RFB Regulatory Instruction 1458, of March 18, 2014)
IX -unloading port, inland transportation, warehousing, customs clearance costs including import taxes and duties, all in the market of destination of the commodity. (Included by RFB Regulatory Instruction 1458, of March 18, 2014)
Paragraph 2 The payment term differences shall be adjusted for the interest amount corresponding to the period between the terms granted for payment of the obligations under analysis, based on the rate adopted by the supply company itself, when proven consistently applied to all installment sales.
Paragraph 3 In the case provided for in paragraph 2, if the consistent levy of a tax rate is not evidenced, the adjustment shall be made based on the rates prescribed by Article 38-A. (As reworded by RFB Regulatory Instruction 1322, of January 16, 2013)
Paragraph 4 The adjustments deriving from differences in negotiated volumes shall be made based on documents issued by the selling company demonstrating the use of lower prices for higher volumes purchased by the buyer.
Paragraph 5 The price adjustment value deriving from the warranties referred to in paragraph 1, item III shall not exceed the amount arrived at by dividing the total expenditures incurred in the preceding computation period by the quantity of goods, services or rights having their warranty in force in the domestic market over the same period.
Paragraph 6 Where under paragraph 5 hereunder the goods, services or rights have not yet been sold in the Brazilian market, the cost in local currency shall be accepted corresponding to the same warranty for product fitness provided in another country.
Paragraph 7 With respect to adjustments by virtue of the provisions set forth in items IV and V of paragraph 1, the price of the goods, services or rights purchased from a related party resident or domiciled abroad which bears the cost of promotion of the goods, services or rights in Brazil may exceed the price adopted by another company which does not bear the same cost limited to the amount spent per unit of the product by the exporting company bearing said liability.
Paragraph 8 For purposes of paragraph 7 hereunder, in case of advertising and publicity for promotional purposes:
I - relating to a business name or trademark, the costs will be split on a pro rata basis into all goods, services or rights sold in Brazil, in proportion to the volumes and respective values of each type of goods, services and rights;
II - relating to a product, the pro rata split will be effected on the basis of such product volumes.
Paragraph 9 The transportation and insurance amounts the burden of which has been borne by the importing company, taxes not recoverable and customs clearance expenses may be added to the cost of goods purchased abroad so long as they are likewise considered in the observable price for purposes of comparison.
Paragraph 10 When using data from a corporate buyer that has borne intermediation charges upon purchasing goods, services or rights, the price of which is a parameter for comparison with that observable in a purchase operation performed with a related company not subject to said charge, the price of goods, services or rights of the latter may exceed that of the former up to the amount corresponding to those charges.
Paragraph 11 For comparison purposes, the price of goods, services and rights shall also be adjusted for differences in cost of materials used in packaging each unit and the relevant insurance and freight charged in each case.
Article 10. In the case of similar goods, services or rights, in addition to the adjustments provided for in article 9, prices shall be adjusted for differences in physical nature and contents, considering, for this purpose, the cost of producing the goods, delivering the service or establishing the right, solely as to the parts that correspond to the differences between the models subject of comparison.
Article 11. From January 1, 2013 on, transactions used for calculation purposes shall:
I - represent at least five percent (5%) of the value of import transactions subject to transfer pricing control, undertaken by a company in the computation period as to the type of imported goods, services or rights, in case the data used for calculation refer to its own transactions; and
II - correspond to uncontrolled prices observable in the same tax year at the respective import transactions subject to transfer pricing control.
Paragraph 1 In the case provided for in item I of the main section hereof, if there are no transactions that represent five percent (5%) of the value of imports subject to transfer pricing control in the computation period, this percentage may be supplemented with import transactions performed in the immediately preceding tax year, as adjusted by the exchange rate change in the period.
Paragraph 2 In the case provided for in item II of the main section hereof, if there is no uncontrolled price in the tax year regarding the import transaction, the uncontrolled price related to the operation performed in the tax year immediately preceding that of the import transaction may be used, as adjusted by the exchange rate change in the period.
Paragraph 3 Upon making exchange rate change adjustments, the parameter prices to be used for comparison purposes when arising from transactions in countries whose currency is not quoted in local currency shall be initially translated into United States Dollars and then into Brazilian reais, by reference to the respective exchange rates prevailing on the date of each operation.
Paragraph 4 To adjust the parameter price by the exchange rate change for the period mentioned in paragraph 2, the following formula is to be applied:

PIA = PI x VC
VC = TOP/TOI
TOP = OPR/OPD
TOI = OIR/OID
where:
PIA = Uncontrolled Price Adjusted in the immediately preceding tax year;
PI = Uncontrolled Price in the immediately preceding tax year;
VC = Exchange Rate Change for the period;
TOP = Average rate of Transactions Performed in the tax year;
TOI = Average rate of Uncontrolled Transactions in the preceding tax year;
OPR = Transactions Performed in Reais in the tax year;
OPD = Transactions Performed in Dollars in the tax year;
OIR = Uncontrolled Transactions in Reais in the immediately preceding tax year;
OID = Uncontrolled Transactions in Dollars in the immediately preceding tax year.
Subsection II
Resale Price less Profit Method (PRL)
Article 12. The cost of imported goods, services or rights that is deductible from IRPJ and CSLL tax bases may also be determined by the Resale Price Less Profit Method (PRL), calculated, as from January 1, 2013, according to the following methodology:
I - net selling price: - the weighted arithmetic mean of sales price of goods, rights or services sold, less:
a) unconditional discounts granted;
b) taxes and contributions levied on sales; and
c) commissions and brokerage fees paid;
II - percentage of participation of the goods, rights or services imported in the total cost of the goods, rights or services sold: - the ratio between the weighted average cost of the imported goods, rights or services and the weighted average total cost of the goods, services or rights sold, calculated in accordance with the cost spreadsheet of the company;
III - participation of the imported goods, rights or services in the sale price of the goods, rights or services sold: - application of the percentage of participation of the imported goods, rights or services in total cost, determined under Item II on the net sales price calculated as per item I;
IV - profit margin: - application of the percentages referred to in paragraph 10 according to the industry sector in which the legal entity subject to transfer pricing control is engaged, on the participation of the imported goods, services or rights in the sale price of the goods, rights or services sold, calculated as per item III; and
V - parameter price: - the difference between the value of participation of the imported goods, rights or services in the sales price of the goods, rights or services sold, calculated as per item III, and the "profit margin" calculated as per item IV;
Paragraph 1 The sales prices to be taken into account shall be the prices used by the importing company in retail and wholesale transactions with unrelated individual or corporate buyers.
Paragraph 2 The weighted arithmetic means of the prices shall be calculated by taking into account the prices observed over the entire period of computation of IRPJ and CSLL tax bases to which the costs, expenses or charges refer.
Paragraph 3 The weighted average cost of the imported goods, rights or services does not include:
I - the insurance and freight value whose burden was borne by the importer, provided they were taken out from:
a) unrelated parties; and
b) parties not resident or domiciled in countries or territories imposing low taxation, or not under privileged taxation regimes;
II - taxes levied on imports, and
III - customs clearance duties.
Paragraph 4 The total weighted average cost of the goods, rights or services sold shall be calculated taking into consideration all of its constituting elements, including insurance and freight value, taxes levied on imports and customs clearance duties.
Paragraph 5 The parameter price shall be determined considering sales prices in the period in which the products are written off of inventories to P&L.
Paragraph 6 For purposes of this method, the weighted arithmetic mean of the sale price shall be verified by taking into account the sale transactions carried out from the purchase date through the end of the tax-computation period, or from day one (1) of the tax computation period, if amounts and quantities existing at the beginning of the period are considered.
Paragraph 7 If the transactions used to determine the average price include cash sales made and installment sales, the prices relating to the latter shall be taken into account net of interest imputed thereto as computed at the rate applied by the company when such rate is proven to be applied consistently to all installment sales throughout the term granted for payment.
Paragraph 8 In the case provided for in paragraph 7 hereunder, if no evidence is produced that an interest rate is consistently applied, the adjustment shall be made by reference to the rates set forth in article 38-A.
Paragraph 9 For purposes of this article:
I - discounts will be deemed unconditional when not dependent on future events, i.e. discounts that are granted on each resale and that appear in the respective sales invoice;
II - taxes, contributions and other charges imposed on sales will be deemed as such when assessed by the government on the sales and included in the price, such as State Value-added Tax (ICMS), Service Tax (ISS), and Social Contributions to the Social Integration Program (PIS/Pasep) and the Social Security Funding (Cofins);
III - commission and brokerage fees shall be understood as amounts paid or amounts payable as such with respect to the sale of goods, services or rights that are subject to examination.
Paragraph 10 The profit margins under item IV of the chapeau shall be applied according to the industry sector in which the Brazilian company subject to transfer pricing control is engaged, regardless of any production process in Brazil, at the following percentages:
I - forty percent (40%), for the following sectors:
a) pharmaceutical chemical and pharmaceutical products;
b) tobacco products;
c) optical, photographic and cinematographic equipment and instruments;
d) machinery, appliances and equipment for dentistry/medical and hospital use;
e) extraction of oil and natural gas; and
f) petroleum products;
II - thirty percent (30%), for the following sectors:
a) chemicals;
b) glasses and glass products;
c) pulp, paper and paper products; and
d) metal works; and
III - twenty percent (20%) for the other sectors.
Paragraph 11 The profit margins under paragraph 10 shall be used regardless of the imported goods, services or rights having been resold or applied to production.
Paragraph 12 In case the company develops activities that fall into more than one item of paragraph 10, the profit margin to be adopted is that corresponding to the activity sector to which the imported goods have been allocated, subject to the provisions of article 13.
Paragraph 13 The profit margins referred to in paragraph 10above shall be applied on the sale price disclosed in the tax invoice, excluding - only - any unconditional discounts granted.
Paragraph 14 In case the imported goods are commodities, the Price under Import Quotation (PCI) method shall be applied, as determined by paragraph 1 of article 16, irrespectively of the economic activity sector itemized in paragraph 10.
Article 13. If the same imported goods are resold and used in the production of one or more products, or if the imported goods are subjected to different production processes in Brazil, the following amounts shall be calculated individually, according to their respective allocations:
I - the weighted average cost of the sale;
II - the percentage of participation of the imported goods, rights or services in the total cost of the goods, rights or services sold under item II of article 12;
III - the participation of the imported goods, rights or services in the sale price of the goods, rights or services sold under item III of article 12;
IV - the profit margin value under item IV of article 12; and
V - the parameter price under item V of article 12.
Sole paragraph. The final parameter price shall be the weighted average of the amount determined pursuant to the main section hereof.
Article 14. The rules set out in article 57 for use of the PRL method shall be observed until December 31, 2012.
Subsection III
Production Cost Plus Profit Method (CPL)
Article 15. The cost of imported goods, services or rights that is deductible from IRPJ and CSLL tax bases may also be determined by use of the Production Cost Plus Profit Method (CPL), defined as the weighted average cost of production of identical or similar goods, services or rights in the country of origin increased by the taxes and fees applied to the related-party export transaction and by a profit margin of twenty percent (20%) of the total cost.
Paragraph 1 The weighted arithmetic mean of the weighted average cost of production referred to in the chapeau shall be calculated by taking into account the costs incurred over the entire period of computation of IRPJ and CSLL tax bases to which the costs, expenses or charges refer.
Paragraph 2 The price determination under this method shall take into account exclusively the costs referred to in paragraph 5 incurred in the production of the goods, services or rights, excluding any other costs, even though these costs may affect the profit margin of the wholesaler.
Paragraph 3 The production cost shall be itemized per component, value and respective suppliers.
Paragraph 4 Information from the supplying unit may be used as well as information from production units from other legal entities located in the country of origin of the goods, services or rights.
Paragraph 5 For purposes of determining the price under this method, the following items may be included as part of the cost:
I - the acquisition cost of raw materials, feedstock and packaging materials used in the production of the goods, services or rights;
II - the cost of any other goods, services or rights applied to or consumed in production;
III - the cost of manpower applied to production, including to the cost of direct supervision, maintenance and custody of production facilities and the respective payroll taxes incurred, required, or provided for by legislation prevailing in the country of origin;
IV - the rental, maintenance and repair costs, and depreciation, amortization or depletion charges relating to the goods, services or rights used in production;
V - amounts corresponding to reasonable levels of breakage and loss incurred in production, as provided for by the tax legislation in the country of origin of the goods, services or rights.
Paragraph 6 Upon determination of the cost of the goods, services or rights purchased by the Brazilian entity, the costs referred to in paragraph 5 hereunder and incurred by the foreign production unit will be considered in proportion to the volume sold to the Brazilian entity.
Paragraph 7 Where a similar product is used to establish the price, the production cost will be adjusted to reflect the differences between the goods, services or rights acquired and the goods, services or rights used as a parameter.
Paragraph 8 The profit margin referred to in the main section hereof shall be applied to the costs computed before taxes and duties collected by the country of origin on the value of goods, services or rights purchased by the Brazilian company.
Subsection IV
Price Under Import Quotation Method (PCI)
Article 16. The Price Under Import Quotation (PCI) method is defined as the average daily quotation prices of goods or rights subject to prices publicly offered at internationally recognized futures and commodities exchanges.
Paragraph 1 As from January 1, 2013, the PCI method shall necessarily be applied in case of import of commodities.
Paragraph 2 The prices of goods imported and declared by individuals or legal entities resident or domiciled in the Country shall be compared with the quotation prices of these goods as traded in internationally recognized futures and commodities exchanges, adjusted to an amount higher or lower than the average market premium on the transaction date, in case of imports from:
I -related individuals or companies;
II - parties resident or domiciled in countries or territories imposing low taxation; or
III - individuals or companies that benefit from privileged taxation regimes.
Paragraph 3 Are considered commodities for Price Quotation on Import (PCI) method application purposes, the goods: (As reworded by RFB Regulatory Instruction 1322, of September 13, 2013)
I - listed in Appendix I hereto that cumulatively are subject to prices publicly listed in the commodities and futures exchanges listed in Appendix II hereto or that are subject to prices publicly quoted by the internationally recognized industrial survey institutions, listed in Appendix III hereto; and (Included RFB Regulatory Instruction 1395, September 13, 2013)
II - traded on the commodities and futures exchanges listed in Appendix II hereto; (Included RFB Regulatory Instruction 1395, September 13, 2013)
Paragraph 4 If there is no quotation available for the day of the transaction, the immediately previous quotation shall be used.
Paragraph 5 If the transaction date cannot be identified, the conversion shall be effected by reference to the date of registration of the goods' import declaration.
Paragraph 6 The premium amount arises on the market valuation, either positive or negative, which shall be added to or deducted from the quotation in an international exchange or survey entity referred to Article 18, to determine the price paid by the importer, and shall also take into account any variations in quality, features, and substance content of the of the commodity to be sold. (As reworded by RFB Regulatory Instruction 1458, of March 18, 2014.
Paragraph 7 If there is no specific price quotation for the imported goods, the average market premium as referred to in material(s) published by internationally recognized sectorial research institutions may also be applied to similar goods.
Paragraph 8 In addition to the premium described in paragraph 6, a commodity price shall be subject to the adjustments corresponding to the differences between the amount supported by the seller and the specifications of the standard contract established by the commodities and futures exchanges, referred to in the heading, or industrial survey entities, as defined in Article 18 below, in light of the specific business conditions, sales terms-International Commercial Terms (Incoterm), content, and physical nature.(As reworded by RFB Regulatory Instruction 1458, of March 18, 2014)
Paragraph 9 The variables that can be taken into account in the adjustments referred to in paragraph 8 are :(As reworded by RFB Regulatory Instruction 1395, of September 13, 2013)
I - payment term; (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
I - volumes traded; (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
III - climate influences on the characteristics of the imported commodity; (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
IV - intermediation costs in arm's length purchase and sales transactions between entities; (Included by RFB Regulatory Instruction 1395, of September 13, 2013).
V - packaging; (As reworded by RFB Regulatory Instruction 1458, of March 18, 2014)
VI - freight and insurance; and (As reworded by RFB Regulatory Instruction 1458, of March 18, 2014)
VII - unloading port, inland transportation, warehousing, customs clearance costs including import taxes and duties, all in the market of destination of the commodity. (Included by RFB Regulatory Instruction 1458, of March 18, 2014)
Paragraph 10 In the adjustments made due to the provisions of paragraph 9, IV, the price of the good sold to a legal entity that bears said expenses, to be compared with the price of another entity that does not bear the same costs, shall deduct said expenditure from the unit price. (Included by RFB Regulatory Instruction 1458, of March 18, 2014)
Paragraph 11 The adjustments addressed in paragraph 8, whose variables are listed in paragraph 9, shall take into account the existing differences between the price paid by the importer and the breakdown of the price quoted in an internationally recognized commodities and futures exchange, as prescribed in the charter of the trading institution, which can be used as supporting documentation of the need for the adjustment. (As reworded by RFB Regulatory Instruction 1458, of March 18, 2014)
Paragraph 12 The amounts described in paragraph 9, to be taken into account as adjustments, shall be based on arm's length transactions. (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
Paragraph 13 In the lack of arm's length transactions conducted by the legal entity domiciled in Brazil, surveys conducted by a company or institution with recognized technical knowledge can be used, based on internationally recognized technical publications or databases.(Included by RFB Regulatory Instruction 1395, of September 13, 2013)
Paragraph 14 The freight cost, as defined in paragraph 9, VI, can be adjusted based on the Baltic Dry Index (BDI). (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
Paragraph 15 For purposes of comparison with the quotation on an internationally recognized commodities and futures exchange, the transaction date is the date when the price was traded, as: (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
I - established in a usual entity contract, including with unrelated parties; or (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
II - a usual market procedure. (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
Paragraph 16 In case the price charged in calculated based on quotations or indices for an average number of days determined in a contractually provided for event, the benchmark price calculation also takes into account the same average number of days. (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
Paragraph 17 The benchmark price calculation method described in paragraph 16 shall be consistently applied per commodity, during the entire calculation period. (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
Article 17. The futures and commodities exchanges that may be considered for PCI purposes are listed in Annex II to this Regulatory Instruction.
Sole paragraph. The RFB may, ex officio or in response to a reasoned application from a trade organization representing an industry sector or the concerned legal entity, include or exclude a futures and commodities exchange in Annex II to this Regulatory Instruction.
Article 18. In the event there is no price quotation of the goods in internationally recognized futures and commodities exchanges, the prices of imported goods referred to in paragraph 2 of article 16 may be compared with those obtained from independent data sources provided by internationally recognized sectorial research institutions.
Article 19. The internationally recognized sectorial research institutions that may be used for price quotation purposes are those listed in Annex III to this Regulatory Instruction.
Chapter III
Exports
Article 20. Income earned in export transactions with a related party shall be subject to price adjustments when the average sale price of goods, services or rights exported during the corresponding IRPJ and CSLL tax computation period is less than ninety percent (90%) of the average sale price of identical or similar goods, services or rights in the Brazilian market during the same period and under similar payment conditions.
Paragraph 1 The average price hereunder shall be obtained by multiplying prices by the volumes of each transaction and the results achieved shall be consolidated and divided by the total volume, thus determining the weighted average price.
Paragraph 2 If the legal entity does not sell in the domestic market, the average price shall be determined based on information obtained from other companies selling identical or similar goods, services or rights in the Brazilian market.
Paragraph 3 For purposes of this article, only purchase and sale transactions carried out in the Brazilian market between unrelated buyers and sellers shall be considered.
Paragraph 4 For comparison purposes the sales price:
I - in the Brazilian market shall be computed net of unconditional discounts granted, of the ICMS tax, of the ISS tax, of the Cofins and PIS/Pasep contributions, of other charges assessed by the government, of the freight and of the insurance costs borne by the selling company.
II - in related-party export transactions shall equal the value obtained after deducting freight and insurance costs, where such costs have been borne by the exporting company.
Article 21. In case of export of commodities subject to trading on internationally recognized futures and commodity exchanges, the Price under Export Quotation (Pecex) method defined in article 34 shall be used, and the provisions set forth in the main section of article 20 shall not apply.
Section I
Common Rules for Export Revenues
Article 22. The value of goods, services or rights shall be adjusted so as to minimize the effect on the prices to be compared by differences in business conditions, physical nature and contents.
Paragraph 1 In the case of identical goods, services or rights, only adjustments relating to the following shall be allowed:
I - payment terms;
II - negotiated volumes;
III - liability for product fitness warranty or for the applicability of the service or right;
IV - liability for promotion of the goods, services or rights to the public by means of advertising and publicity, pursuant to provisions set forth in article 9, paragraphs 7 and 8;
V - liability for quality control, service and sanitary standards;
VI - agency costs for purchase and sale transactions carried out by unrelated parties, taken into account for the purpose of price comparisons;
VII - packaging;
VIII - freight and insurance; (As reworded by RFB Regulatory Instruction 1458, of March 18, 2014)
IX - credit risks; and (As reworded by RFB Regulatory Instruction 1458, of March 18, 2014)
X - unloading port, inland transportation, warehousing, customs clearance costs including import taxes and duties, all in the market of destination of the commodity. (Included by RFB Regulatory Instruction 1458, of March 18, 2014)
Paragraph 2 The payment term differences shall be adjusted for the amount of interest corresponding to the period between the terms granted for payment of the liabilities under consideration, based on the interest rate applied by the supplier when such interest rate is applied consistently with respect to all installment sales.
Paragraph 3 In the case provided for in paragraph 2, if the consistent levy of a tax rate is not evidenced, the adjustment shall be made based on the rates prescribed by Article 38-A. (As reworded by RFB Regulatory Instruction 1322, of January 16, 2013).
Paragraph 4 The adjustments in view of differences in the negotiated volumes shall be made based on documents issued by the selling company, demonstrating the use of lower prices for higher volumes purchased by the buyer.
Paragraph 5 For purposes of adjustment for the warranties for product fitness under item III of paragraph 1, the price may not exceed the value arrived at by dividing total expenditures within the previous tax-computation period by the quantity of goods, services and rights under warranty for product fitness within the domestic market over the same period.
Paragraph 6 Where under the hypothesis formulated in paragraph 5, the goods, services or rights have not yet been sold in the Brazilian market, the cost in local currency shall be accepted corresponding to the same warranty for product fitness provided in another country.
Paragraph 7 With respect to adjustments by virtue of the provisions set forth in items IV and V of paragraph 1, in order to compare the price of the goods, services or rights sold to a related party resident or domiciled abroad which bears the cost of promotion of the goods, services or rights to the price charged by another company which does not bear the same cost, such burden shall be deducted, by product unit, from the price charged by the company that bears such costs.
Paragraph 8 The rule under paragraph 7 hereunder shall also be applied with respect to agency charges to the sale of goods, services or rights.
Paragraph 9 The prices of goods, services or rights shall also be adjusted to take account of the differences in the cost of materials used in the packaging and the freight and insurance charged in each case.
Paragraph 10.For purposes of item IX of paragraph 1, the adjustments for credit risks shall be:
I - allowed only with respect to the transactions carried out between buyer and seller domiciled in Brazil; and
II - made based on the percentage resulting from comparing total losses and total credits relating to the previous tax year.
Article 23. The average price charged on related-party export transactions and the parameter price shall be obtained by multiplying the prices by the quantities relating to each operation and the results thus obtained shall be added and divided by the total quantity, giving rise, therefore, to the weighted average price.
Article 24. In the case of similar goods, services or rights, in addition to the adjustments provided for under article 23, the prices shall be adjusted to take account of the differences of physical nature and differences in contents considering the costs relating to the production of the goods, the performance of the service or the constitutions of the right exclusively for the parts corresponding to the differences between the models subject to comparison.
Article 25. If identification of sale transactions within the same tax-computation period of the prices under examination is not possible, the comparison may be made with prices adopted for transactions carried out in previous or subsequent periods provided these prices are adjusted for foreign exchange rate variations in the reference currency from the date of one transaction to the date of the other transaction.
Article 26. Once ascertained that the sales price of related-party export transactions is lower than the limitation provided for by article 20, including the adjustments referred to under articles 22 to 25, the revenues from export sales shall be determined by adopting one of the methods under articles 30 to 33, except for the case provided for in article 21.
Paragraph 1 For purposes of application of the methods referred to in this article, the weighted arithmetic means shall be computed with respect to the tax-computation period, unless the company is using data from other periods, in which case the arithmetic means shall be related to the respective period.
Paragraph 2 In the circumstances described in paragraph 1, the prices determined in foreign currency shall be adjusted to take into account variations in the foreign exchange rate of the reference currency, occurred between the transaction dates.
Article 27. If more than one method is used, the lowest amount determined shall be considered subject to the provisions of the sole paragraph hereunder, and the method adopted by the company shall be consistently applied per good, service or right throughout the tax computation period.
Sole paragraph. If the amount determined under said methods is lower than the sales price disclosed in the export documents, the amount relating to the revenue recognized as per said documents shall prevail.
Article 28. The portion of revenues determined under this Regulatory Instruction which exceeds the amount recorded in the company's books shall be added to net profit for purposes of determining IRPJ and CSLL tax bases, as well as taken into consideration upon computing the deemed or reconstructed profit.
Sole paragraph. Upon computing the profit generated by tax-incentive-related activities, the amount to be added shall be taken into consideration in the corresponding revenues, whether or not said revenues qualify for the tax incentive.
Article 29. The sales revenue deriving from exports of goods, services and rights expressed in foreign currency will be converted into Brazilian reais at the purchase exchange rate established by the opening quotations schedule issued by the Central Bank of Brazil, for the date:
I - of shipment, in case of goods;
II - of the effective provision of the service or transfer of the right.
Paragraph 1 The date of the effective provision of the service or transfer of the right is the date to recognize the revenue as earned, deemed as the moment at which title thereto arises, when it shall be accounted for on an accrual basis.
Paragraph 2 In case the taxpayer has opted for the deemed profit taxation regime, on a cash basis, the revenue shall be construed as earned on an accrual basis.
Section II
Methods applicable to Exports
Subsection I
Export Sales Price Method (PVEx)
Article 30. The revenue from export sales may be determined on the basis of the Export Sale Price Method (PVEx), defined as the weighted arithmetic mean of sale prices charged on exports effected to other customers by the entity itself, or by another domestic exporting entity, for identical or similar goods, services or rights in sales made during the same IRPJ tax basis computation period, under similar payment conditions.
Paragraph 1 For purposes of this method, only the sales to customers unrelated to the Brazilian entity shall be taken into account.
Paragraph 2 The adjustments referred to under articles 22 to 25 are applicable to the prices that are used as a parameter, under this method.
Subsection II
Wholesale Price in the Country of Destination Less Profit Method (PVA)
Article 31. The revenue from export sales may be determined on the basis of the Wholesale Price in the Country of Destination Less Profit Method (PVA), defined as the weighted arithmetic mean of the sale prices for identical or similar goods in sales made in the wholesale market of the country of destination, under similar payment conditions, reduced by the taxes included in the price, collected in the country of destination, and by a profit margin of fifteen percent (15%) of the wholesale price.
Paragraph 1 The taxes to be deemed included in the price are those which bear a similarity to the ICMS and ISS taxes, and Cofins and PIS/Pasep contributions.
Paragraph 2 The profit margin to which this article refers shall be applied to the gross wholesale price.
Paragraph 3 The adjustments under articles 22 to 25 are applicable to the prices used as a parameter.
Subsection III
Retail Price in the Country of Destination Less Profit Method (PVV)
Article 32. The revenue from export sales may be determined on the basis of the Retail Price in the Country of Destination Less Profit Method (PVV), defined as the weighted arithmetic mean of the price of identical or similar goods in sales made in the retail market of the country of destination, under similar payment conditions, reduced by the taxes included in the price and by a profit margin of thirty percent (30%) of the retail price.
Sole paragraph. The rules contained under paragraphs 1 and 2 of article 31 and the adjustments under articles 22 to 25 shall be applicable to this method.
Subsection IV
Acquisition or Production Cost Plus Taxes and Profit Method (CAP)
Article 33. The revenue from export sales may be determined on the basis of the Acquisition or Production Cost Plus Taxes and Profit Method (CAP), which is defined as the weighted arithmetic mean of the acquisition cost or production cost of exported goods, services or rights, increased by taxes paid in Brazil and by a profit margin of fifteen percent (15%) of the total costs plus taxes.
Paragraph 1 Amounts paid for insurance and freight by the purchasing company are included in the purchase cost with respect to exported goods, services and rights.
Paragraph 2 The portion of deemed IPI credit granted as reimbursement of Cofins and PIS/Pasep contributions corresponding to the exported goods shall be excluded from the purchase and production costs.
Paragraph 3 The profit margin under this article shall be applied to the outstanding amount, after exclusion of the portion of the deemed credit referred to in paragraph 2 hereunder.
Paragraph 4 The price with respect to direct exports made by the producer itself, determined using this method, may be deemed a parameter for the price charged by the entity in exports carried out through a trading company, where no additional adjustment relating to the trading company's profit margin is required to be made.
Subsection V
Price Under Export Quotation Method (Pecex)
Article 34. The Price Under Export Quotation Method (Pecex) is defined as the average daily quotation prices of goods or rights subject to prices publicly offered at internationally recognized futures and commodities exchanges.
Paragraph 1 As from January 1, 2013, the Pecex method shall necessarily be applied in case of export of commodities subject to trading at internationally recognized futures and commodities exchanges.
Paragraph 2 The prices of goods exported and declared by individuals or legal entities resident or domiciled in the Country shall be compared with the quotation prices of these goods as traded in internationally recognized futures and commodities exchanges, adjusted to an amount higher or lower than the average market premium on the transaction date, in case of exports to:
I - related individuals or companies;
II - parties resident or domiciled in countries or territories imposing low taxation; or
III - individuals or companies that benefit from privileged taxation regimes.
Paragraph 3 Are considered commodities for Price Quotation on Export (Pecex) method application purposes, the goods:

I - listed in Appendix I hereto that cumulatively are subject to prices publicly listed in the commodities and futures exchanges listed in Appendix II hereto or that are subject to prices publicly quoted by the internationally recognized industrial survey institutions, listed in Appendix III hereto; and
II - traded on the commodities and futures exchanges listed in Appendix II hereto;
Paragraph 4 If there is no quotation available for the day of the transaction, the immediately previous quotation shall be used.
Paragraph 5 If the transaction date cannot be identified, the conversion shall be effected by reference to the date of shipment of the exported goods.
Paragraph 6 The income from transactions addressed in the main section hereof shall be subject to having transfer prices arbitrarily determined, and the ninety percent (90%) rule under the main section of article 20 does not apply.
Paragraph 7 The premium amount arises on the market valuation, either positive or negative, which shall be added to or deducted from the quotation in an international exchange or survey entity referred to Article 36, to determine the price paid by the exporter, and shall also take into account any variations in quality, features, and substance content of the of the commodity to be sold. (As reworded by RFB Regulatory Instruction 1395, of September 13, 2013)
Paragraph 8 In the absence of a specific quotation for the exported goods, the average market premium can also be applied to similar goods, referred to in a publication by internationally recognized sectorial research institutions.
Paragraph 9 In addition to the premium described in paragraph 7, a commodity price shall be subject to the adjustments corresponding to the differences between the amount supported by the seller and the specifications of the standard contract established by the commodities and futures exchanges, referred to in the heading, or industrial survey entities, as defined in Article 36 below, in light of the specific business conditions, sales terms-Incoterm, content, and physical nature. (As reworded by RFB Regulatory Instruction 1458, of March 18, 2014)
Paragraph 10 The variables that can be taken into account in the adjustments referred to in paragraph 9 are: (As reworded by RFB Regulatory Instruction 1395, of September 13, 2013)
I - payment term; (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
II - amounts traded; (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
III - climate influences on the characteristics of the exported commodity; (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
IV - intermediation costs in arm's length purchase and sales transactions between entities; (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
V - packaging; (As reworded by RFB Regulatory Instruction 1458, of March 18, 2014)
VI - freight and insurance; and (As reworded by RFB Regulatory Instruction 1458, of March 18, 2014)
VII - unloading port, inland transportation, warehousing, customs clearance costs including import taxes and duties, all in the market of destination of the commodity. (Included by RFB Regulatory Instruction 1458, of March 18, 2014)
Paragraph 11 In the adjustments made due to the provisions of paragraph 10, IV, the price of the good sold to a legal entity that bears said expenses, to be compared with the price of another entity that does not bear the same costs, shall deduct said expenditure from the unit price. (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
Paragraph 12 The adjustments addressed in paragraph 10 shall take into account the existing differences between the price paid by the exporter and the breakdown of the price quoted in an internationally recognized commodities and futures exchange, as prescribed in the charter of the trading institution, which can be used as supporting documentation of the need for the adjustment. (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
Paragraph 13 The amounts described in paragraph 10, to be taken into account as adjustments, shall be based on arm's length transactions. (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
Paragraph 14 In the lack of arm's length transactions conducted by the legal entity domiciled in Brazil, surveys conducted by a company or institution with recognized technical knowledge can be used, based on internationally recognized technical publications or databases. (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
Paragraph 15 The freight cost, as defined in paragraph 10, VI, can be adjusted based on the Baltic Dry Index (BDI). (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
Paragraph 16 For purposes of comparison with the quotation on an internationally recognized commodities and futures exchange, the transaction date is the date when the price was traded: (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
I - established in a usual entity contract, including with unrelated parties; or (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
II - a usual market procedure. (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
§ 17. In case the price charged in calculated based on quotations or indices for an average number of days determined in a contractually provided for event, the benchmark price calculation also takes into account the same average number of days. (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
Paragraph 18 The benchmark price calculation method described in paragraph 17 shall be consistently applied per commodity, during the entire calculation period. (Included by RFB Regulatory Instruction 1395, of September 13, 2013)



Article 35. The futures and commodities exchanges that can be considered for purposes of application of Pecex are listed in Annex II to this Regulatory Instruction.
Sole paragraph. The RFB may, ex officio or in response to a reasoned application from a trade organization representing an industry sector or the concerned legal entity, include or exclude a futures and commodities exchange in Annex II to this Regulatory Instruction.
Article 36. In the event there is no price quotation of the goods in internationally recognized futures and commodities exchanges, the prices of exported goods referred to in paragraph 2 of article 34 may be compared:
I - with those obtained from independent data sources provided by internationally recognized sectorial research institutions, or
II - with prices set by regulators or agencies and published in the Federal Official Gazette.
Sole paragraph. The internationally recognized sectorial research institutions to which one may resort for price quotations are those listed in Annex III to this Regulatory Instruction.
Article 36-A. In the case of commodities with regional benchmark prices, an exporting legal entity shall pick as benchmark price, the commodity's price in the market of destination of the exported commodity: (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
I - listed in internationally recognized commodities and futures exchanges; or (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
II - obtained from independent data sources provided by internationally recognized industry data survey institutions. (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
Paragraph 1 If there is no price quoted in a commodities and futures exchange or disclosed by industry data survey institutions in the market of destination of the exported commodity, an exporting legal entity shall pick as benchmark price the price quoted in the closest market. (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
Paragraph 2 If there is no available price quoted in a commodities and futures exchange or disclosed by industry data survey institutions, or if such price is very different from the quoted price in the market of destination of the exported commodity, an exporting legal entity can use a price charged for the same commodity from an unrelated party or a party nonresident in a tax haven or benefiting from an advantageous tax regime. (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
Paragraph 3 The independent price based on an exporter's own transactions, referred to in paragraph 2, can be used to account for at least five percent (5%) of the turnover of export transactions subject to transfer pricing control, conducted by a legal entity during the calculation period. (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
Paragraph 4 In case the Price Quotation on Export (Pecex) method is used), under the terms established in the heading and paragraph 1 hereto, an exporting legal entity can make the adjustments prescribed by Article 34 above. (Included by RFB Regulatory Instruction 1458, of March 18, 2014)
Paragraph 5 As for the use of the independent price prescribed by paragraph 2, can make the adjustments prescribed by no Article 22, paragraph 1. (Included by RFB Regulatory Instruction 1458, of March 18, 2014)
Chapter IV
Back-to-Back Transactions
Article 37. Back-to-back transactions are subject to the Brazilian transfer pricing rules when:
I -goods are purchased from or sold to a related party resident or domiciled abroad; or
II - goods are purchased from or sold to related or unrelated parties resident or domiciled in a country or territory imposing low taxation or that benefit from privileged taxation regime.
Paragraph 1 For purposes of the main section hereof, back-to-back transactions are those in which the purchase and sale of products occur without these products effectively coming to or leaving Brazil. The product is purchased from a foreign country and sold to a third country without the transit of such goods in Brazil.
Paragraph 2 The profit margin in any and all transaction carried out between related parties shall be proven consistent with the margin observable in transactions performed with uncontrolled legal entities.
Paragraph 3 Two (2) parameter prices shall be determined in respect of the purchase and the sale transaction, subject to the legal restrictions on the use of each computation method.
Chapter V
Interest
Article 38. For agreements executed in tax year 2012, interest paid or credited to a related party arising from a loan agreement shall be deductible upon computing IRPJ and CSLL tax bases only up to the amount not exceeding the Libor rate for six-month US dollar deposits, increased by an annual spread of three percent (3%) or applicable prorated percentage.
Paragraph 1 With respect to a loan to a related party, a lender resident in Brazil shall recognize at least the amount determined as provided for hereunder as financial income.
Paragraph 2 For purposes of the limitation established hereunder, the interest payments shall be calculated based on the agreement value translated into the equivalent Brazilian currency amount at the foreign exchange rate, published by the Central Bank of Brazil, prevailing on the final date for calculation of such interest.
Paragraph 3 The interest amount which exceeds the deductible limit referred to in the chapeau shall be added to the IRPJ and CSLL tax bases.
Paragraph 4 The difference in interest income determined in accordance with the provisions set forth in paragraph 2 hereunder shall be added to the IRPJ tax basis, or the deemed or reconstructed profit, and the CSLL tax basis.
Paragraph 5 The Minister of Finance may reduce the spread percentage as well as restore it to the value set in the chapeau.
Paragraph 6 In the case of interest payments in which the paying individual or legal entity bears the withholding income tax burden imposed thereon, the amount thereof shall not be taken into account for purposes of the deductible limit.
Paragraph 7 The computation of interest referred to in this article may be made based on agreements or set of financial operations with identical dates, rates and terms.
Paragraph 8 For purposes of this article, operations are deemed financial if resulting from agreements, including those relating to investment of funds and capitalization of credit lines, executed with an individual or legal entity resident or domiciled abroad, whose remittance or transfer of the principal has been carried out in foreign currency or by means of an international transfer of Brazilian currency.
Paragraph 9 For purposes of the limits referred to in the main section of this article and in paragraph 1 hereunder, the Libor rate to be used is the one prevailing on the date on which the agreement's initial term commenced, and shall be changed at each 183 days, up to the date on which the term for computation of interest ends.
Paragraph 10. The provisions of this article shall apply to agreements in progress on its effective date, though previously established, but not yet extinguished.
Paragraph 11. The provisions of this article shall apply only to the option case under article 56.
Article 38-A. From January 1, 2013 onwards, interest paid or credited to a related party shall be deductible upon computing IRPJ and CSLL tax bases only up to the amount not exceeding that calculated based on a rate determined under this article increased by a spread percentage to be determined by way of an act published by the Minister of Finance based on the market average, as prorated for the period to which the interest refers.
Paragraph 1 In the case of a loan agreement with a related party, the lending legal entity domiciled in Brazil shall recognize as financial income corresponding to the operation at least the amount determined under the provisions of this article.
Paragraph 2 For purposes of the limit referred to in this article, interest shall be calculated based on the amount of the obligation or the right expressed in the currency subject of the contract, and converted into Brazilian reais at the exchange rate published by the Central Bank of Brazil as of the date of the interest calculation final term.
Paragraph 3 The interest charge that exceeds the limit mentioned in the chapeau shall be added to IRPJ and CSLL tax bases.
Paragraph 4 The difference in revenue determined pursuant to paragraph 2 shall be added to the taxable, deemed or reconstructed profit for IRPJ tax purposes and to the CSLL tax basis.
Paragraph 5 In interest payments where the interest-remitting individual or legal entity bears the burden of the tax, its value shall not be considered for purposes of the tax deductibility limit.
Paragraph 6 The computation of interest referred to in the chapeau may be made based on agreements or set of financial operations with identical dates, rates and terms.
Paragraph 7 For purposes of this article, operations are deemed financial if resulting from agreements, including those relating to investment of funds and capitalization of credit lines, executed with an individual or legal entity resident or domiciled abroad, whose remittance or transfer of the principal has been carried out in foreign currency or by means of an international transfer of Brazilian currency.
Paragraph 8 The rate referred to in this article shall be:
I - that of the Federative Republic of Brazil sovereign bonds market issued in foreign markets in United States dollars, in case of operations in United States dollars at a fixed rate;
II - that of the Federative Republic of Brazil sovereign bonds market issued in foreign markets in Brazilian reais, in case of operations in Brazilian reais abroad at a fixed rate; and
III - the Libor rate for a six-month period, in all other cases.
Paragraph 9 In the case of item III of paragraph 8, for operations carried out in other currencies for which no Libor rate of their own is published, the Libor rate for United States dollar-deposits shall be applied.
Paragraph 10.The checking addressed hereunder shall be carried out on the operation contracting date and apply to agreements executed from January 1, 2013 onwards.
Paragraph 11.For purposes of paragraph 10, any renewal and/or renegotiation are deemed to be new agreements.
Paragraph 12.In case of operations contracted prior to December 31, 2012, proof of the contracting date shall be provided by producing the agreement registered with the Central Bank of Brazil.
Paragraph 13.In the absence of proof of registration mentioned in paragraph 12, the legal entity shall abide by the limit of interest for the expense or revenue calculated based on LIBOR for six-month US-dollar deposits plus three percent (3%) annual spread, pursuant to article 58.
Article 39. The rules set out in article 58 for interest calculation shall be observed until December 31, 2012.
Chapter VI
Miscellaneous
Section I
Opting for a Method
Article 40. From tax year 2012, the option for one of the methods prescribed by Chapters II and III hereof will be exercised for the tax year and cannot be changed by the taxpayer once a tax proceeding is initiated, unless in the course thereof the method selected or any of its calculation criteria is disregarded by the tax authorities, in which case the taxpayer should be served notice to submit a recalculation under any other method provided for by law within thirty (30) days.
Paragraph 1 The tax authorities shall provide justifiable reason for disregarding the method selected by the legal entity.
Paragraph 2 The tax authority responsible for the inspection may determine the parameter price based on the available documents and apply a method set out in Chapters II and III, when the taxpayer, after expiry of the term provided for in the chapeau:
I - fails to produce the documents that would support determination of the price adopted or the respective calculation reports to determine the parameter price under the method chosen;
II - produces worthless or insufficient documents to demonstrate the appropriateness of the parameter price calculation under the method selected; or
III - fails to provide any useful elements for ascertaining the calculations for determining the parameter price under the selected method when so requested by the tax authority.
Paragraph 3 Presentation of a recalculation according to another method as provided for hereunder does not rule out the possibility of an ex officio fine being imposed on any difference identified in the computed IRPJ or CSLL taxes.
Paragraph 4 The option referred to in the main section hereof shall be made in the Corporate Income Tax Return relating to the tax year of the transactions subject to transfer pricing control.
Article 41. The transfer pricing method in question must be consistently applied to the respective good, service or right for the entire tax year.
Section II
Similarity Concept
Article 42. For purposes of this Regulatory Instruction, two (2) or more goods under conditions in which they are used for their intended purposes shall be deemed to be similar when such goods, concurrently,
I - have the same nature and the same function;
II - may substitute for each other in their intended function; and
III - have equivalent specifications.
Section III
Supplemental Documentary Evidence
Article 43. In addition to the documents regularly issued by companies in their purchase and sale operations, evidence of prices to which this Regulatory Instruction refers may also be produced by way of:
I - official publications or reports from the government of the country of origin of seller or buyer, or a declaration of such country's tax authorities if the country concerned has signed a double taxation or information exchange treaty with Brazil;
II - market research conducted by a recognized, technically qualified firm or institution or technical publication, which specifies the industry sector, the period, the companies researched and the profit margins, and which identifies, for each company, the data collected and analyzed.
Paragraph 1 The publications, research or technical reports under this article shall be accepted as evidence only if carried out in compliance with internationally accepted appraisal criteria and provided they are concurrent to the Brazilian entity's IRPJ tax-computation period.
Paragraph 2 Price publications acceptable as evidence comprise research conducted under the auspices of multilateral entities, such as the Organization of Economic Cooperation and Development (OECD) and the World Trade Organization (WTO).
Paragraph 3 With regard to research relating to a period other than that referring to the price used by the company, the amount determined shall be adjusted to take account of the variation in the foreign exchange rate for the reference currency from one period to another.
Paragraph 4 The technical publications, research and reports referred to in this article may be rejected by the Federal Revenue Service if deemed to be inconsistent or unreliable.
Section IV
Special Types of Transactions
Article 44. The adoption of prices of goods, services or rights used in special kinds of purchase and sale transactions, such as liquidation of inventory, discontinuance of operations or sales made subject to government subsidies shall not be allowed as a parameter.
Section V
Change in Percentages
Article 45. The percentages under Chapters II and III may be altered by resolution of the Minister of Finance.
Paragraph 1 Changes in the percentages under this article shall be of general, sectorial or specific nature, ex officio or in compliance with a request from an entity representing an industry sector with respect to the goods, services or rights traded by the represented companies, or upon request from a concerned company.
Paragraph 2 The rules applied to the inquiry procedures provided for by Decree no. 70235 of March 6, 1972 - Tax Administrative Proceeding - shall be observed in the applications for changes in percentages filed by industry sector or by company.
Article 46. Cosit shall examine applications for changes in percentages under paragraph 2 of article 45, and shall make proposals to the Secretary of the Federal Revenue Service, on a case-by-case basis, to be submitted for approval by the Minister of Finance.
Paragraph 1 In the case of a refusal, the decision shall be reported in the application; if approved, the decision shall be published in its entirety in a Ministerial Administrative Ruling in the Federal Official Gazette.
Paragraph 2 The publication procedure for decisions awarded by the Minister of Finance described in paragraph 1 shall also be applicable to cases of partial approval.
Paragraph 3 If an application for new margins is approved, Cosit shall disclose whether it agrees to the period of time suggested by the applicant, or otherwise propose a time period which it deems appropriate.
Article 47. Applications for changes in percentages made by trade associations or by a company shall contain information about the period during which the proposed margins will be effective and shall be submitted accompanied by the following documents:
I - a statement of the production cost of goods, services or rights, issued by the nonresident supplier;
II - a statement of annual total of purchases and sales per type of good, service or right which is the subject of the application;
III - a statement of amounts paid as insurance and freight, with respect to the goods, services or rights;
IV - a statement of the deemed IPI credit granted as reimbursement of PIS/Pasep and Cofins contributions, corresponding to the goods which are the subject of the application.
Paragraph 1 The statements shall be supported by the following documents:
I - Copies of the purchase documents relating to goods, services or rights, the tax collection documents on import transactions and other charges computed as cost, relating to the previous tax year;
II - Copies of the fiscal documents evidencing payment of taxes and duties levied on exports charged in the exporting country;
III Copies of the sales fiscal documents issued in the last tax year for transactions between the nonresident related party and the unrelated wholesale companies acting as distributors of the goods, services or rights which are the subject of the applications;
IV - Copies of the sales fiscal documents issued to consumers by retailers located in the country of destination of the goods, services or rights, which disclose the respective prices charged.
Paragraph 2 The documents described in paragraph 1 shall not be annexed to the application, but shall be kept on file for presentation at the fiscal domicile of the applicant company or the company represented by the applicant trade association whenever so required by Cosit.
Paragraph 3 In addition to the documents referred to in this article, applications for changes in percentages may be justified on the basis of the documents referred to in article 43.
Section VI
Safe Harbor Rules
Article 48. From January 1, 2013 onwards, a legal entity that proves having realized pre-IRPJ-and-CSLL-tax net profits deriving from revenues from export sales to related companies, in an amount equivalent to a minimum of ten percent (10%) of the total revenue from said exports, considering the annual average of the tax computation period and that of the two (2) preceding years may demonstrate the adequacy of prices charged in referred related-party export transactions, during the same tax period, exclusively with the documents relating to the operation itself.
Paragraph 1 The provision set forth above solely applies if the net revenue from exports to related companies does not exceed twenty percent (20%) of the total net export revenue.
Paragraph 2 For purposes of this article, the net profits corresponding to related-party export transactions shall be determined in accordance with the rules set forth in article 187 of Law no. 6404 of December 15, 1976 and in the income tax legislation.
Paragraph 3 Upon determination of the net profits corresponding to said exports, shared sales cost and expenses will be prorated based on the respective net revenues.
Paragraph 4 In order to determine the percentage established in the chapeau, the sales transactions involving goods, services or rights whose profit margins as prescribed in articles. 31, 32 and 33 have been changed pursuant to articles 45, 46 and 47 shall not be taken into consideration.
Article 49. A legal entity whose net revenue originating from related-party export transactions during the tax year does not exceed five percent (5%) of the total net revenue realized in the same period may demonstrate the adequacy of prices charged in referred exports exclusively with the documents related to the operation itself.
Sole paragraph. The net revenue originating from exports shall include revenues from sales made to individuals or legal entities resident or domiciled in countries imposing low taxation.
Article 50. The provisions set forth by articles 48 and 49:
I - do not apply to sales transacted with related or unrelated party domiciled in a country or territory imposing low taxation, or with internal legislation imposing secrecy, as defined under article 52;
II - do not entail definitive acceptance of the revenue amount recognized on the basis of the price adopted, which may be adjusted, if deemed inadequate, via ex officio procedures on the part of the SRF.
III - do not apply in case of export of commodities subject to trading on internationally recognized futures and commodity exchanges, in which case the Price Under Export Quotation (Pecex) method defined in article 34 shall be used.
Section VII
Margin of Difference
Article 51. When in transactions with related parties, the adjusted price used as a parameter is either in excess of or lower than the price disclosed in import or export documents by a difference of up to 5%, the price shall be deemed acceptable.
Paragraph 1 In this case, no price adjustment shall be required from the company for purposes of computation of IRPJ and CSLL tax bases.
Paragraph 2 The margin referred to in the main section hereof shall be three percent (3%) in case of import or export of commodities subject to trading on internationally recognized futures and commodities exchanges, in which case the Price Under Import Quotation (PCI) method or the Price Under Export Quotation (Pecex) method defined in articles 16 and 34, respectively, shall be used.
Chapter VII
Country Imposing Low Taxation or with Legislation Imposing Secrecy
Article 52. The rules for the transfer prices of goods, services and rights and for interest rates under this Regulatory Instruction are also applicable to transactions carried out by an individual or legal entity resident or domiciled in Brazil with any individual or legal entity, whether related or unrelated, resident or domiciled in a jurisdiction that imposes no taxation on income, or a taxation at a rate of less than twenty percent (20%), or whose domestic legislation imposes secrecy as to legal entities' ownership structure or shareholding.
Paragraph 1 For purposes of a country or territory imposing low taxation, the tax legislation applicable to individuals or legal entities of that jurisdiction shall be taken into account, according to the nature of the entity with which transactions were undertaken.
Paragraph 2 In the case of a Brazilian resident individual:
I - the value determined by the methodology provided for under articles 8 to 15 shall be deemed as the cost basis for purposes of calculating capital gains on the sale of an asset or right;
II - the price related to the sale of an asset or right for purposes of calculating the capital gain shall be determined in accordance with the provisions set forth by articles 20 to 33;
III - the price of services rendered as determined by articles 20 to 33 shall be deemed to be taxable revenues.
IV - the interest payments determined under article 38 shall be deemed to be taxable revenues.
Paragraph 3 For purposes of this article, the effective tax rate, in the jurisdiction of the individual or legal entity, shall be determined by comparing the total tax paid on profits by legal entities and the withholding tax on the distribution of such profits, with profits determined under Brazilian tax law before imposition of such taxes.
Paragraph 4 In order to construe a country or territory imposing low taxation as such, taxation on income from labor and from capital shall be considered separately.
Chapter VIII
Inspection Procedures
Article 53. The company subject to inspection procedures shall provide to Tax Auditors from the Brazilian Federal Revenue Service - AFRFB the documentation used to support the determination of the price adopted; the respective calculation reports for parameter price determination under the methodology adopted and reported in the DIPJ return; and the documents for compliance with the safe harbor rules addressed in articles 48 and 49.
Paragraph 1 If the method or any of its calculation criteria is disregarded by the tax authorities, the legal entity shall be served notice to present a recalculation under any other method prescribed by Chapter II or III within thirty (30) days, excepting transactions involving goods or rights subject to prices publicly offered at Internationally recognized futures and commodities exchanges.
Paragraph 2 If the methodology is not described and the documents required for proving the parameter price adequacy are not submitted, or if upon submission the documents are incomplete or unreliable as transfer pricing evidence, the AFRFB in charge of the inspection may determine the price, based on other information available, by applying one of the accepted methods under this Regulatory Instruction.
Article 54. The ascertainment of transfer prices under this Regulatory Instruction shall be effected on an annual basis, except for the cases of commencement or discontinuance of activities and suspicion of fraud.
Article 55. The transfer price rules under this Regulatory Instruction are not applicable to the payment to foreign entities of royalties as well as fees for technical, scientific, administrative or similar assistance.
Chapter IX
Temporary Provisions
Article 56. A legal entity may elect to adopt the provisions set forth in articles 11, 12, 16, 34 and 38 of this Regulatory Instruction for purposes of applying the transfer pricing rules for tax year 2012.
Paragraph 1 This option shall be irreversible and entail compliance with all the amendments brought by articles 11, 12, 16, 34 and 38.
Paragraph 2 The option addressed hereunder shall be made in the Corporate Income Tax Return relating to tax year 2012.
Section I
Resale Price Less Profit Method (PRL)
Article 57. Until December 31, 2012, the cost of imported goods, services or rights that is deductible from IRPJ and CSLL tax bases may also be determined by the Resale Price Less Profit Method (PRL), defined as the weighted arithmetic mean of resale price of goods, rights or services, less:
I - unconditional discounts granted;
II - taxes and contributions levied on sales;
III - commissions and brokerage fees paid;
IV - profit margin of:
a) twenty percent (20%), in case of resale of goods, services or rights;
b) sixty percent (60%), in case of imported goods, services or rights used in the production process.
Paragraph 1 The resale prices to be taken into account shall be the prices used by the importing company in retail and wholesale transactions with unrelated individual or corporate buyers.
Paragraph 2 The average purchase and resale prices shall be weighted according to the negotiated volumes.
Paragraph 3 Upon determination of the weighted average price the total values and volumes relating to existing inventories at the beginning of the tax computation period shall be computed.
Paragraph 4 For purposes of this method, the weighted arithmetic mean of the price shall be verified by taking into account the resale transactions carried out from the purchase date through the end of the tax computation period.
Paragraph 5 If the transactions used to determine the average price include cash sales made and installment sales, the prices relating to the latter shall be taken into account net of interest imputed thereto as computed at the rate applied by the company when such rate is proven to be applied consistently to all installment sales throughout the term granted for payment.
Paragraph 6 In the case provided for in paragraph 5 hereunder, if no evidence is produced that an interest rate is consistently applied, the adjustment shall be made by reference to:
I - the Special Settlement and Custody System - SELIC rate for federal government bonds, prorated for the period, when both buyer and seller are resident in Brazil;
II - Libor, prorated for the period, for six-month-US-dollar deposits increased by 3% per year as a spread, if one of the parties is nonresident.
Paragraph 7 For purposes of this article:
I - discounts will be deemed unconditional when not dependent on future events, i.e. discounts that are granted on each resale and that appear in the respective sales invoice;
II - taxes, contributions and other charges imposed on sales will be deemed as such when assessed by the government on the sales and included in the price, such as ICMS, ISS, PIS/Pasep and Cofins;
III - commission and brokerage fees shall be understood as amounts paid or amounts payable as such with respect to the sale of goods, services or rights that are subject to examination.
Paragraph 8 The profit margin under the heading of item IV, "a" shall be applied to the resale price disclosed in the tax invoice excluding - only - any unconditional discounts granted.
Paragraph 9 The Resale Price Less Profit method where a twenty-percent (20%) gross margin is used shall only be applicable to those cases in which no value is added in the Country to the cost of imported goods, services or rights, that is, cases which represent a mere resale of the said imported goods, services or rights.
Paragraph 10. The method under item IV, "b" of this article shall be applied in case of imported goods, services or rights that are used in the production process.
Paragraph 11. In the case provided for in paragraph 10 hereunder, the parameter price of imported goods, services and rights shall be determined excluding the value added to them in the Country and the gross margin of sixty percent (60%), according to the following methodology:
I - net sale price: the weighted arithmetic mean of sale prices of the finished good produced, less unconditional discounts granted, taxes and contributions levied on the sales as well as commissions and brokerage fees paid;
II - percentage participation of imported goods, services or rights in the finished good produced: the percentage ratio, computed in accordance to the entity's costing system, between the value of the imported good, service or right and the produced good's total cost;
III - participation of imported goods, services or rights in the produced good's sale price: the application of the percentage participation of imported good, service or right in the produced good's total cost, computed according to item II, to the net sale price computed in accordance with item I;
IV - profit margin: the application of the sixty percent (60%) rate to the "participation of imported good, service or right in the produced good's sale price", computed according to item III;
V - Parameter price: the difference between "participation of imported good, service or right in the produced good's sale price", computed in accordance with item III, and the sixty percent (60%) profit margin, computed according to item IV.
Paragraph 12. For purposes of determining the price to be used as a parameter, the import transaction price shall include insurance and freight value, the burden of which has been borne by the importing company, and taxes not recoverable due on the import.
Section II
Interest
Article 58. For agreements entered into until December 31, 2012, interest paid or credited to a related party arising from a loan agreement which has not been registered with the Central Bank of Brazil shall be deductible upon computing IRPJ and CSLL tax bases only up to the amount not exceeding the Libor rate for six-month US dollar deposits, increased by an annual spread of three percent (3%) or applicable prorated percentage.
Paragraph 1 With respect to a loan to a related party, a lender resident in Brazil shall recognize at least the amount determined as provided for hereunder as financial income.
Paragraph 2 For purposes of the limitation established hereunder, the interest payments shall be calculated based on the agreement value translated into the equivalent Brazilian currency amount at the foreign exchange rate, published by the Central Bank of Brazil, prevailing on the final date for calculation of such interest.
Paragraph 3 The interest amount which exceeds the deductible limit referred to in the chapeau shall be added to the IRPJ and CSLL tax bases.
Paragraph 4 The difference in interest income determined pursuant to the provisions of paragraph 2 hereunder shall be added to the IRPJ tax basis, or the deemed or reconstructed profit, and the CSLL tax basis.
Paragraph 5 Interest rates stipulated in agreements registered with the Central Bank of Brazil shall be accepted.
Paragraph 6 In the case of interest payments in which the paying individual or legal entity bears the withholding income tax burden imposed thereon, the amount thereof shall not be taken into account for purposes of the deductible limit.
Paragraph 7 The computation of interest referred to in this article may be made based on agreements or set of financial operations with identical dates, rates and terms.
Paragraph 8 For purposes of this article, operations are deemed financial if resulting from agreements, including those relating to investment of funds and capitalization of credit lines, executed with an individual or legal entity resident or domiciled abroad, whose remittance or transfer of the principal has been carried out in foreign currency or by means of an international transfer of Brazilian currency.
Paragraph 9 For purposes of the limits referred to in the main section of this article and in paragraph 1 hereunder, the Libor rate to be used is the one prevailing on the date on which the agreement's initial term commenced, and shall be changed at each one hundred eighty-three (183) days, up to the date on which the term for computation of interest ends.

Section III
Safe Harbor Rules
Article 58-A. Until December 31, 2012, a legal entity that proves having realized pre IRPJ-and-CSLL-tax net profits deriving from revenues from export sales to related companies, in an amount equivalent to a minimum of five percent (5%) of the total revenue from said exports, considering the annual average of the tax computation period and that of the two (2) preceding years may demonstrate the adequacy of prices charged in referred related-party export transactions, during the same tax period, exclusively with the documents relating to the operation itself.
Paragraph 1 For purposes of this article, the net profits corresponding to related-party export transactions shall be determined in accordance with the rules set forth in article 187 of Law no. 6404 of December 15, 1976 and in the income tax legislation.
Paragraph 2 Upon determination of the net profits corresponding to said exports, shared sales cost and expenses will be prorated based on the respective net revenues.
Paragraph 3 In order to determine the percentage established in the chapeau, the sales transactions involving goods, services or rights whose profit margins as prescribed in articles. 31, 32 and 33 have been changed pursuant to articles 45, 46 and 47 shall not be taken into consideration.
Article 59. This Regulatory Instruction is effective from its publication date.
Article 60. SRF Regulatory Instruction SRF no. 243 of November 11, 2002 is hereby repealed.
CARLOS ALBERTO DE FREITAS BARRETO

























ANNEX I
COMMODITIES AND THEIR RESPECTIVE CODES UNDER MERCOSUR'S COMMON NOMENCLATURE FOR PURPOSES OF APPLYING PCI AND PECEX METHODS
I. Cane or beet sugar and chemically pure sucrose in solid state (NCM 17.01.1);
II. Cotton (NCM 52);
III. Aluminum and articles thereof (NCM 76);
IV. Cocoa and cocoa preparations (NCM 18);
V. Coffee, whether roasted or decaffeinated, coffee husks and skins; coffee substitutes containing coffee in any proportion (NCM 09.01);
VI. Meat and edible meat offal (NCM 02);
VII. Coal (NCM 27.01 to 27.04);
VIII. Copper Ores and Concentrates (NCM 2603.00); (As reworded by RFB Regulatory Instruction 1395, of September 13, 2013)
IX. Tin Ores and Concentrates (NCM 2609.00.00); (As reworded by RFB Regulatory Instruction 1395, of September 13, 2013)
X. Soybean Meal (NCM 2304.00);
XI. Wheat flours or the mixture of wheat and rye (meslin) (NCM 1101.00);
XII. Iron Ores and Concentrates (NCM 26.01); (As reworded by RFB Regulatory Instruction 1395, of September 13, 2013)
XIII. Petroleum gases and other gaseous hydrocarbons (NCM 27.11);
XIV. Manganese Ores and Concentrates (NCM 2602.00); (As reworded by RFB Regulatory Instruction 1395, of September 13, 2013)
XV. Soybean oil and its fractions (NCM 15:07);
XVI. Gold (including gold plated with platinum), unwrought or in semi-manufactured forms, or in powder form (NCM 71.08);
XVII. Oil (NCM 27.09 and 27.10);
XVIII. Silver (including silver plated with gold or platinum), unwrought or in semi-manufactured forms, or in powder form (NCM 71.06);
XIX. Soybean, whether or not broken (NCM 12:01);
XX. Orange juice (NCM 2009.1);
XXI. Wheat and mixture of wheat and rye (meslin) (NCM 10.01).


ANNEX II
FUTURES AND COMMODITIES EXCHANGES
I. Chicago Board of Trade (CBOT) - Chicago - USA;
II. Chicago Mercantile Exchange (CME) - Chicago - USA;
III. New York Mercantile Exchange (NYMEX) - New York - USA;
IV. Commodity Exchange (COMEX) - New York - USA;
V. Intercontinental Exchange (ICE US) - Atlanta - USA;
VI. Futures & Commodities Exchange (BM&F) - São Paulo - Brazil;
VII. Life NYSE Euronext (LIFFE) - London - United Kingdom;
VIII. London Metal Exchange (LME) - London - United Kingdom;
IX. Intercontinental Exchange (ICE Europe) - London - United Kingdom;
X. Tokyo Commodity Exchange (TOCOM) - Tokyo - Japan;
XI. Tokyo Grain Exchange (TGE) - Tokyo - Japan;
XII. Singapore Commodity Exchange (SICOM) - Singapore;
XIII. Hong Kong Commodity Exchange (HKE) - Hong Kong - China;
XIV. Multi Commodity Exchange (MCX) - Bombay - India;
XV. National Commodity & Derivatives Exchange Limited (NCDEX) - Bombay - India;
XVI. Agricultural Futures Exchange of Thailand (AFET) - Bangkok - Thailand;
XVII. Australian Securities Exchange (ASX) - Sydney - Australia;
XVIII. JSE Safex APD (SAFEX) - Johannesburg - South Africa;
XIX. Korea Exchange (KRX) - Busan - South Korea;
XX. China Beijing International Mining Exchange, (CBMX);
XXI. GlobalORE;
XXII. London Bullion Market Association (LBMA);


ANNEX III
INTERNATIONALLY RECOGNIZED SECTORAL RESEARCH INSTITUTIONS
I. PLATTS;
II. ARGUS;
III. CMA;
IV. ESALQ;
V. TSI;
VI. THE METAL BULLETIN;
VII. CRU MONITOR;
VIII. CIS; (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
IX. CMAI; (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
X. POTEN&PARTNERS; (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
XI. BLOOMBERG; (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
XII. ICIS HEREN; (Included by RFB Regulatory Instruction 1395, of September 13, 2013)
XIII. U.S. Energy Information Administration (EIA). (Included by RFB Regulatory Instruction 1395, of September 13, 2013)